On May 28, MedAssets, Inc. MDAS announced that it has extended its supply chain relationship with Jackson Health System (Jackson). However, news of the renewed partnership failed to cheer investors. Shares of the company fell over 1% (25 cents) to close the session at $20.87 on May 29.
Jackson has been leveraging MedAssets’ solutions since 2010 to efficiently reduce operating costs. In fact, this non-profit academic medical system has saved more than $42 million since the start of its relationship with MedAssets.
With the deal renewal in place, Jackson will continue to use MedAssets Cost Analytics, which delivers business intelligence that facilitates cost reduction in supply chain. Jackson will also continue using MedAssets’ national group purchasing organization (GPO) in order to access industry-leading pricing on supplies. Additionally, it will avail of MedAssets’ recently completed enterprise consulting engagement.
Of late, MedAssets has remained focused on expanding vital partnership agreements. Last month, the company renewed its existing collaborations with Vanderbilt University Medical Center (VUMC) and Athens Regional Medical Center (ARMC).
VUMC has selected MedAssets to leverage the latter’s Lean Healthcare Transformation & Integration Consulting services for an improved performance. In the course of 18 months, VUMC staff will be given the necessary training by MedAssets to help better patient outcomes.
On its part, ARMC expanded its relationship with MedAssets to further enhance revenue cycle operations. ARMC's multi-phased agreement will use MedAssets portfolio of Revenue Cycle Management (RCM) solutions to upgrade the former’s technology environment.
We believe these partnership renewals bode well for MedAssets. The extended associations will help drive better sales of MedAssets’ wide range of solutions, in turn, aiding overall top-line growth.
However, what acts as a spoiler is MedAssets’ lackluster 2015 outlook. The bottom line is expected to be significantly affected by lower revenue growth as well as higher employee incentives and increased depreciation expenses. Notably, the company projects adjusted EPS in the range of $1.13–$1.23, down 8.9%–16.3% on a year-over-year basis.
Zacks Rank
Currently, MedAssets has a Zacks Rank #3 (Hold). Better-ranked medical stocks at the current moment include AMN Healthcare Services AHS, Cancer Genetics CGIX and INC Research Holdings INCR. All the stocks sport a Zacks Rank #1 (Strong Buy).
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